Tencent Market Value Tops $100 Billion, Nearing Facebook

Many people outside China may have never heard of Tencent Holdings Ltd., but the Chinese Internet giant is now worth almost as much as Facebook Inc.

Tencent’s headquarters in the southern Chinese city of Shenzhen.

Reuters

The market value of Hong Kong-listed Tencent, which operates the popular WeChat smartphone messaging app and various other online services in China, just topped US$100 billion this week, coming close to Facebook’s market capitalization of about US$103.5 billion.

WeChat, ubiquitous among Chinese smartphone users, has 236 million active users, according to Tencent. Many analysts and investors expect Tencent to cash in on WeChat’s growing user base by offering various additional services such as gaming, e-commerce and advertising.

Among China’s major Internet companies, Tencent is in the best position to benefit from the Web’s migration to mobile devices from personal computers, said Jefferies analyst Cynthia Meng.

In the latest development in the sector’s realignment, Tencent said Monday that it had invested US$448 million in Sohu.com Inc.’s Sogou online search business, taking a 36.5% stake. Sogou will likely enable Tencent to offer better search user experience to mobile users, said Ms. Meng.

By comparison, Nasdaq-listed Baidu’s market capitalization is about US$50 billion. Alibaba is gearing up for an initial public offering that could value the company at US$70 billion or more based on analyst estimates, but it is unclear when the IPO will happen, as the company is still negotiating with Hong Kong’s stock exchange and regulator about pre-conditions for its listing. Alibaba is looking at both Hong Kong and New York as possible listing venues.

Ms. Meng, who has a Buy rating on Tencent shares, said that one of the factors behind the recent share price gains is a general preference for Internet stocks. Amid concerns over China’s sluggish economy, some investors have been moving funds out of traditional industries such as manufacturing, and buying more Internet stocks, as the sector is relatively less dependent on overall economic conditions, she said.

At the midday break on Tuesday, Tencent’s shares were down 0.3% at HK$420, putting the market capitalization at about US$100.6 billion.